Want to become a millionaire? Find the next Tesla(NASDAQ: TSLA). Since 2010, Tesla shares have risen in value by nearly 28,000%. An original investment of just $36 would have turned into $1 million over that time period. Few investments in history have been able to provide this much gains over such a short period.
Understandably, many investors are wondering what the next big electric car stock will be. From many perspectives, Lucid Group(NASDAQ: LCID) has all the right things going for it to become the next Tesla. But before you jump in, there are a few factors you'll want to understand.
Lucid is following Tesla's growth plan
Starting an electric car company from scratch is incredibly difficult. It takes billions of dollars plus sometimes a decade or more to bring a vehicle to market. There's no guarantee that investors are willing to remain that patient for that long. There's also no guarantee that customers will even like the vehicles once they hit the market.
Fortunately, Tesla has already proven to the market how an electric vehicle (EV) maker should scale. Tesla first started with high-priced luxury vehicles like the Roadster, Model X, and Model S. These models targeted customers with big spending budgets, allowing the company to produce vehicles with truly impressive performance metrics. This created a reputation for quality even at low volumes. From there, Tesla was able to leverage that reputation and investor trust into lower-priced vehicles that were affordable by the masses.
Today, more than 90% of Tesla's vehicles sales come from its budget Model 3 and Model Y models -- a big reason why the company is now worth more than $1 trillion. This is the formula: Create impressive luxury vehicles to establish reputation and scale, and then move into the mass market to produce affordable models for millions of new buyers.
So far, Lucid has been following Tesla's paved path for growth, though it still is in the early innings of growth. Right now, the company sells just two luxury models: the Lucid Air and the all new Gravity SUV platform. These vehicles are roughly similar to Tesla's Model S and Model X vehicles. Growth is picking up considerably thanks to the recent introduction of the Gravity SUV. Analysts predict 73% sales growth this year, with another 96% sales growth in 2026.
But the real growth will occur when Lucid releases its mass market vehicles. While information has been relatively scarce, the company recently reaffirmed its expectation to launch the first of many midsize, lower-priced models beginning in 2026. Even if it takes until 2027 to start scaling production in a meaningful way, this event would absolutely transform the company's prospects, enabling Lucid to grow sales by heavy double digits for many years to come.
Image source: Getty Images.
Don't forget what it was like for Tesla investors
Lucid's long-term growth prospects are exciting. But don't expect shares to go in a straight line higher. Just take a look at Tesla's historical journey. From 2014 to 2019, Tesla's sales grew from $3 billion to more than $20 billion. Yet the share price largely traded sideways, leaving investors with minimal gains. However, if you had held on for another five years, you would have experienced truly seismic gains.
Tesla's history proves that high-growth stocks require extreme patience, even during periods of heavy growth. Now trading at 8 times sales, Lucid's valuation will surely gyrate wildly in the coming years. If you believe in its growth journey, this upfront premium will be worth the price of admission. But in any given year, it's hard to know how the market will value that growth.
With a market capitalization of just $8 billion, there's clearly huge growth potential for the company, especially compared to Tesla's $1 trillion valuation. There's enough to turn a small investment into millions of dollars. But the road forward will be bumpy, suitable for risk-tolerant, long-term investors only.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
